Challenges and Considerations for Asda in Trading Across Borders and Creating a Positive Social Impact

Title Page

ASDA Stores Ltd.
Introduction
Asda Stores Ltd. is a British supermarket retail chain, founded in 1949 by Peter and Fred Asquith
and Sir Noel Stockdale. It is headquartered in Leeds, Yorkshire in the United Kingdom. The
company was formed as the result of a merger between the Asquith Family and the Associated
Dairies Company (Yorkshire). It was acquired by American super chain Walmart in 1999 for an
estimated value of almost £7 billion (“ASDA - Our History”, n.d.). The company is currently the
second largest retail chain store in the UK just falling behind Tesco.
Asda, besides its core service of super markets, offers various other services as well. The
company provides various mobile and financial services along with a number of other services
such as logistics services, daily living items and petrol filling stations. The company currently
employs more than 165,000 people across more than 600 locations and serves a total of more
than 18 million customers every week (“ASDA – Company Facts”, n.d.). The prime principle of
Asda is the control of price to entice the customers to visit their stores. It offers features such as
Every Day Low Pricing which is a product of its basic tagline for promotion – ‘Save Money.
Live Better’.
In 2009, Asda was “sold” by Walmart to its subsidiary Corinth Services Ltd. The sale meant that
the prime control was in the hand of the Corinth Group but which itself is a subsidiary of
Walmart. The parent company remained the same and the only purpose of this was an internal
restructuring of the entire organization (MacDonald, 2009). The company has also tried merging
with Sainsbury’s, another UK retail chain store but the merger was declined by the UK
government. The reason behind this was that it would give Asda more than 30% of the total
grocery market share in UK and would lead to a high price rise.
The purpose of this essay is to highlight the various challenges that the company needs to
consider when trading across borders and the considerations that it needs to keep in mind when
trying to create a positive social impact. Also, an effort has been made to discuss the various
aspects that the company needs to consider when enhancing their business. These topics have
been divided into different parts so as to make it concise and give a clear understanding of the
required tasks.

Part 1
(b) The various challenges that the company needs to consider when trading across borders
are discussed below:
 Increasing regulations: The biggest challenge that Asda has to face when trading across
borders is the increase in the regulations which the company has to fulfill in order to gain
entry and trade in a foreign market. The company needs to ensure that it is satisfying the
ever increasing number of rules that have to be followed to successfully become a part of
the foreign markets. Every country has a different set of stipulations that it applies to
businesses. And the knowledge of theses stipulations should be gained before attempting
to become a part of the market. Also, apart from the already existing rules, there are
regulatory changes being made every day (Schirr, 2017). The owners at Asda need to be
fully knowledgeable with regard to these changes so that all terms and conditions of
foreign markets can be fulfilled.
 Competition: The threat from the existing competition in the foreign markets is the
biggest threat to Asda. Various retail chains such as Tesco and Sainsbury have an
international presence that gives a direct competition to new entrants in a foreign market.
Asda needs to be prepared to deal with these challenges that are a routine part of the
competition that retail chains face. It needs to determine the steps that can be taken to
ensure that the competition is a healthy one and does not become detrimental to its
existence.
 High Costs of Compliance: Setting up a business in a foreign country comes with a high
cost of compliance for any business. All countries have a set of rules and regulations that
need to be followed to get a business set up in a foreign domicile or trading to and from
another country (“Trading across Borders”, n.d.). The logistical expenses of import and
export, the time taken, the insurance costs of goods, the costs of documentary compliance
are only some of the expenses which Asda has to take care of when it wants to trade
across the international borders. The company needs to invest in training and education
for its officers so that the compliance for trading becomes easy to understand and
execute. This, in itself, is another major challenge for trade.

 Lack of Harmony in Setting Standards: There is a lack of harmony in the world
markets in the setting up of standards of trade. Every country has set up their own
regulations which need to be followed if any outside business wants to trade in its
markets. Asda has to face similar challenges of understanding of different rules and
regulations with respect to every country that it wants to trade into. The only solution for
this is that there should be an international body responsible for setting up of rules and
guidelines for trade so that every business has it relatively easier when it wants to export
or import its goods.
 Barriers to Entry: Retailers wanting to trade across international barriers are constantly
facing challenges in one way or another. One such challenge is the barrier to entry into a
new market. Asda has to face threat from existing monopolies in foreign markets. There
are various retail chain stores that already have their feet firmly planted in the ground and
are not willing to share their dominance with foreign entrants. One example of this is the
trials and tribulations which have been faced by Walmart and Asda both in entering the
South Korean market (Corstjens and Lal, 2012).
 Increased Time to Market Goods: Marketing of products is the biggest challenge that
has been faced by businesses of every kind since time immemorial. For Asda, selling of
goods across international borders is still relatively easy as compared to marketing of said
goods. After sale has been made, it is essential to make the consumers in the foreign
markets aware of the goods that the foreign new entrant is selling in the market. For this,
marketing is essential. Asda has to invest a considerable amount in advertising and
promotion of its goods that are being sold in foreign markets. One of the techniques
which it can employ for this is to employ famous faces in the international territory so
that the customers can relate to them. This also gives Asda an appearance of being
successful enough to employ that it can pay large sum of money to actors, politicians,
influencers and the like.
 Pressure to Bring Something New to the Market: Every company which wants to
trade across borders has the constant burden to bring something unique to the market.
Why would the foreign consumers want to buy something from Asda which they can buy
from their local familiar retail chains? Asda faces the major challenge of creating
something new and unique if it wants to sell its goods to foreign markets. There is a